- Bitcoin options markets show a bullish shift following the Federal Reserve meeting, with calls now in higher demand than puts.
- Ether options continue to exhibit bearish sentiment despite the upcoming Ethereum Pectra upgrade, with puts remaining more expensive through May expiry.
- The Fed’s maintained forecast of two rate cuts this year and the resolution of the SEC-Ripple legal case have contributed to positive Bitcoin sentiment.
Bitcoin traders have pivoted toward bullish options strategies following the Federal Reserve’s recent meeting, while Ethereum derivatives markets maintain a cautious stance. This sentiment divergence highlights a nuanced crypto market reaction to recent monetary policy signals and technological developments across different blockchain ecosystems.
The shift in Bitcoin options trading represents a significant change from previous weeks. Data from Amberdata reveals that both short-term and long-term risk reversals for Bitcoin now show positive values, indicating traders are willing to pay premiums for calls (bullish bets) over puts (bearish bets).
This marks a clear reversal from the weeks preceding the Fed meeting when downside protection through puts commanded higher premiums, reflecting market concerns about potential price declines.
Paradigm, an institutional over-the-counter trading platform, noted the change in market behavior: “Frontend skew flipped calls. Flows featured 21 Mar outright calls and calendars bought, while 28 Mar puts were sold.” These institutional trades executed via platforms like Paradigm are subsequently listed on Deribit, the leading crypto options exchange.
For investors unfamiliar with derivatives terminology, options contracts provide the purchaser the right—but not the obligation—to buy (call option) or sell (put option) an asset at a predetermined price before a specific expiration date.
Several factors appear to be driving Bitcoin’s improved sentiment. The Federal Reserve maintained its projection for two interest rate cuts in 2023 despite adjusting economic forecasts. Additionally, Fed Chairman Powell downplayed concerns about inflationary impacts from potential Trump tariffs, describing such effects as transitory.
Market sentiment also likely benefited from the resolution of the prolonged legal conflict between the SEC and Ripple, which utilizes XRP for cross-border transactions. As the world’s fourth-largest cryptocurrency with a $142.21 billion market capitalization, XRP’s regulatory clarity represents a significant development for the broader crypto ecosystem.
Ethereum Maintains Bearish Options Skew
Despite Bitcoin’s optimistic derivatives positioning, Ethereum options markets continue to show preference for downside protection. Risk reversal data indicates that puts remain more expensive than calls through the May expiry, maintaining pre-Fed caution despite Ethereum’s upcoming technological upgrade.
The Ethereum Pectra upgrade, scheduled for March 26, promises significant enhancements including smart accounts, blob scaling, and validator UX improvements. Many industry participants view the upgrade as a potential game changer. Ethereum developers recently launched a new test network called Hoodi to prepare for the implementation.
Market analysts suggest that the persistent preference for Ethereum puts may serve a dual purpose. Beyond expressing caution about Ether itself, traders often use ETH options to hedge downside risks in smaller altcoins, as Ethereum typically functions as the leading indicator for alternative cryptocurrency performance.
This ongoing divergence between Bitcoin and Ethereum derivatives markets highlights how investors are currently differentiating between the two largest cryptocurrencies, with Bitcoin attracting more optimistic positioning while Ethereum traders maintain a more protective stance despite significant technological catalysts on the horizon.
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